World Bank warns on Russia as sanctions bite

The World Bank cut its Russia growth forecast on Wednesday, warning of economic stagnation until 2016.

The international financial institution now sees the Russian economy growing by only 0.3 percent next year and 0.4 percent in 2016.

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"Economic activity was already hamstrung by lingering structural problems and a wait-and-see attitude on the part of both businesses and consumers in 2013," said the World Bank in its Russia Economic Report on Wednesday.

Both the U.S. and the European Union hit Russia with fresh sanctions this month, including restrictions on the country's large state-owned oil companies operating in Europe. In retaliation, Russia has banned some Western food imports.

Last week, the country's former finance minister forecast that net capital outflows would hit $110 billion this year. In addition, the finance ministry announced it might tap its reserve fund in 2015—for the first time in six years—due to increasing capital flight and falling oil prices.

The World Bank sees growth coming in at 0.5 percent this year, in line with Russian government expectations.